March money supply growth rebounds

By Amy Su / Staff reporter

The annual growth in the M1B and M2 money supply rebounded last month due to faster growth in bank loans and investments, the central bank said yesterday.

M1B, a narrow measure of money supply in circulation that includes currency and passbook savings deposits, rose 3.47 percent from a year ago, faster than February’s annual increase of 2.84 percent, the bank said in its monthly report.

The broader M2 monetary measurement — which includes M1B, time deposits, foreign currency deposits and mutual funds — increased 5 percent year-on-year last month. It also grew at a faster pace than February’s 4.92 percent annual growth, the report said.

The US$2.92 billion net inflow of foreign capital was the other major factor driving last month’s growth in M1B, Chen E-dawn (陳一端), deputy head of the bank’s economic research department, told a press conference.

“The data indicated annual growth in the M1B for last month has not factored in the negative impact from the uncertainty over [a proposed] capital gains tax on securities investments,” Chen said.

However, growth in the M1B money aggregate could slow this month as investors adjust their capital allocation amid continuing uncertainty over the proposed tax, Chen added.

“Capital in circulation remains abundant, but the stock market’s momentum would depend on investors’ evaluations and confidence,” she said.

Foreign-held New Taiwan dollar deposits increased by NT$3.9 billion from a month earlier to NT$214.2 billion last month, the report showed.

For the first three months of the year, M1B and M2 grew by an average of 3.39 percent and 5.07 percent respectively, data showed.